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SpeakerCraft Likes Life Under Linear

7/26/2004 02:00:00 AM Eastern

SpeakerCraft has reduced product-development time, stepped up feature content and expanded its dealer-training program as a result of its purchase in mid-2003 by Linear, owner of multiple custom-installation brands.

SpeakerCraft was one of Linear's most recent acquisitions, having entered the consumer electronics and residential custom-install markets through acquisition in recent years. Acquired custom-install suppliers include Elan Home Systems, Channel Plus, Open House, Xantech, and most recently, OmniMount Systems.

Following its acquisition, SpeakerCraft has been transitioning production to a Linear-owned factory in China, enabling the company to reduce product-development time to nine to 10 months for electronics from a typical year, and in speakers to five to seven months from six to nine months, said SpeakerCraft's president Jeremy Burkhardt. The move to Linear's factory lets the company integrate the quality-control and manufacturing processes, he explained.

The first speaker products have already made the transition, and electronics products will make the transition in the fourth quarter.

With the transition underway, SpeakerCraft is taking advantage of the factory's manufacturing efficiencies and lack of a middleman to make its products more competitive on price and features, Burkhardt said. Rather than reduce prices, however, SpeakerCraft adds more features, such as larger power supplies or more amplifier channels, to products, he noted.

Despite the new factory's efficiencies, SpeakerCraft raised prices 3 percent across the board on June 1 because of rising raw-material prices, but dealers didn't suffer margin deterioration because margins were increased more than 3 percent, Burkhardt said.

Linear's financial resources, he continued, enable the company to enter new product categories more quickly. A complete line of HDD-based music servers, for example, will be unveiled at the CEDIA Expo. "I don't know how long it would have taken without Linear," he said.

With Linear's resources, the company also expanded its dealer-training schedule to offer at least one training session per quarter per sales territory, Burkhardt said. Previously, SpeakerCraft held one to two sessions per year per territory.

Sales growth continues at high double-digit rates, he continued. "Linear purchases companies that are running great and leaves them alone," Burkhardt said. For that reason, he added, Linear hasn't had to consolidate the back-office functions of acquired companies, enabling them to maintain their identities.

Acquired companies, however, get the opportunity to share products or technologies. SpeakerCraft, for example, has begun distributing the structured-wiring and video-distribution products of Open House and Channel Plus. SpeakerCraft has also been able to take advantage of Elan technologies. Future SpeakerCraft products, for example, will take advantage of Elan's door-bell-override technology, Burkhardt said.